MEDICARE​​

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Whether you’re new to Medicare, getting ready to turn 65, or preparing to retire, you’ll need to make several important decisions about your health coverage. 

There are only certain times when people can enroll in Medicare. Depending on the situation, some people may get Medicare automatically, and others need to apply for Medicare. If you wait to enroll, you may have to pay a penalty, and you may have a gap in coverage. 

The first time you can enroll is called your Initial Enrollment Period. Your 7-month Initial Enrollment Period usually:

  • Begins 3 months before the month you turn 65
  • Includes the month you turn 65
  • Ends 3 months after the month you turn 65

If you don’t enroll when you’re first eligible, you may have to pay a Part B late enrollment penalty, and you may have a gap in coverage if you decide you want Part B later.

Most people are automatically enrolled in premium-free Part A when they turn 65, even if they have health insurance from an employer.   If you haven't worked  at least 10 yaers (40 quarters under Medicare-covered employment and paid Medicare taxes, you may be eligible to manually sign up and pay a monthly premium.  In addition, if your spouse qualifies for premium-free Part A, you may be eligible to qualify for premium-free Part A based on their work histroy.

You can sign up for free Part A (if you’re eligible) any time during or after your Initial Enrollment Period starts. If you sign up within 6 months of your 65th birthday, your coverage will start at one of these times:

  • The first day of the month you turn 65
  • The month before you turn 65 (if your birthday is the first of the month)

After that, your coverage start date will go back (retroactively) 6 months from when you sign up.

In most cases, if you don't sign up for Part B when you're first eligible, you'll have to pay a late enrollment penalty. You'll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.  You not be required to pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period

Certain people may choose to delay Part B.  The decision could depend on the type of health coverage you may have. Everyone pays a monthly premium for Part B. The premium varies depending on your income and when you enroll in Part B


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​​Late Enrollment Penalties for Parts A & B​​

If you aren't eligible for premium-free Part A, and you don't buy it when you're first eligible, your monthly premium may go up 10%. You'll have to pay the higher premium for twice the number of years you could have had Part A, but didn't sign up.

In most cases, if you don't sign up for Part B when you're first eligible, you'll have to pay a late enrollment penalty. You'll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year. (Usually, you don't pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.)
Once you’re enrolled in Part A and/or Part B, you may have other Medicare coverage options available to you, including Medicare Part C coverage (Medicare Advantage plans), Medicare Part D coverage (prescription drug benefits), and Medicare Supplement insurance (also known as Medigap). Some of these Medicare plans work alongside Original Medicare, while others (such as Medicare Advantage plans) are an alternative way to get your Original Medicare benefits.

A Medicare Advantatge Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.

Medicare offers limited prescription drug coverage (Part D) to everyone with Medicare.  Original Medicare beneficiaries can sign up for Medicare Part D prescription drug coverage through a separate Medicare Prescription Drug Plan. Keep in mind that these plans provide stand-alone prescription drug benefits, and you’ll need to stay enrolled in Part A and/or Part B for your hospital and medical coverage.  If you decide not to get Medicare drug coverage when you're first eligible, you'll likely pay a late enrollment penalty unless one of these applies:

  • You have other creditable prescription drug coverage
  • You get "Extra Help"

To get Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.  Alternatively, you can also get Medicare Part D coverage through a Medicare Advantage Prescription Drug plan. The convenience of these plans is that they provide all of your Medicare Part A, Part B, and Part D benefits under a single plan.

Late Enrollment Penalties for Part D

The late enrollment penalty is an amount added to your M​edicare Part D monthly premium.
You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

  • A Medicare Prescription Drug Plan (Part D)
  • A Medicare Advantage Plan (Part C) (like an HMO or PPO)
  • Another Medicare health plan that offers Medicare prescription drug coverage
  • Creditable prescription drug coverage 

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($35.63 in 2017; $35.02 in 2018) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.
Medicare Supplement plans may help pay for out-of-pocket costs not covered in Original Medicare, such as copayments, coinsurance, deductibles, and emergency overseas health coverage. You can learn more about this type of Medicare coverage by checking out the Medicare Supplements Page .

Hopelly, this will give you a better idea of what Medicare coverage may be available to you.  There are many componetes to Medicare and it can become overwhelming.   We will be happy to help you determine what coverage may fit your needs.
W.M. Durham Associates LLC is not affiliated nor endorsed by any government agency.  WM Durham Associates LLC nor any of its employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice.